Budget gap in Maryland may lead to doubling sports betting tax rate

Maryland Double Tax Rate Sports Betting
Image: Shutterstock

A budget proposal in Maryland proposed doubling the state’s sports betting tax rate to drive economic growth amid a fiscal shortfall.

Maryland Gov. Wes Moore has published his Budget Highlights for FY2026, which provides lawmakers and residents with ways to potentially balance the state’s budget.

Moore and his administration are considering raising Maryland’s sports betting tax rate as it faces a $3 billion budget gap. As of January 2025, active statutory requirements in Maryland tax licensed online and retail sports betting operators at a 15% rate.

In Moore’s FY2026 budget, he proposes doubling Maryland’s tax rate from 15% to 30%. The proposal also considers raising the state’s table game tax rate from 20% to 25%.

“When budgets are tight, our top priorities come more into focus and analyzing results is key to ensuring the state government is working for Marylanders,” said Moore. “The administration has proposed a package of very difficult tradeoffs, and we look forward to a continued conversation with the General Assembly and the Maryland public.”

The increase is being considered to mirror the tax rates of neighboring markets while also fostering sound tax policy. In FY2026, the increase is projected to generate $95.4 million.

Tax revenue distribution in Maryland

Moore is considering a tax increase as Maryland continues to grow as a regulated market.

In December 2024, licensed operators reported a $637.3 million total betting handle compared to $559.8 million for the same month the year prior. Last month, operators combined for $6.5 million in sports wagering tax, up from $6.4 million in December 2023.

Since wagering went live in 2021, Maryland has allocated $135 million toward the Blueprint for Maryland’s Future Fund while the Problem Gambling Fund has collected $3.6 million.

Illinois makes changes to tax rates

Last year, Illinois made changes to its sports betting tax rates to increase revenue.

Illinois Gov. J.B. Pritzker signed the state’s budget plan into law in June 2024 overhauling the state’s sports wagering tax system to feature a sliding scale. The plan sees operators taxed based on their adjusted gross revenue with operators generating over $200 million in revenue being taxed at a 40% rate. The rate is the second-highest behind New York’s 51%. Operators that don’t meet that revenue threshold are taxed at a 20% rate.